Managing your own rental property is easy...until it's not.
I understand why some landlords decide to self manage their rental properties. In fact, that's how I got started in 1996…still in college and about to get married, I read several books about no money down real estate investing and creating passive income…I bought my first rental property that year and I've been a landlord ever since.
You don't know what you don't know...
Something I learned managing my own properties before becoming a licensed property manager and REALTOR is that when you don't know what you don't know, small problems can escalate into costly mistakes quickly. Many landlords don't even realize how much money they’re losing by not having hired the right property manager from the get go.
Many current clients of mine started out managing their own properties and later hired me as a full service property manager when the problems and headaches became more than they could handle.
Tenants get behind on the rent and often tell a good story getting the self-managing landlord emotionally involved in trying to work with them. This often leads to the tenant making small catch up payments while falling further and further behind on the rent. The landlord becomes increasingly frustrated with the stories, the broken promises to pay and trying to keep track of all the small payments. By the time they decide to call in a professional, the tenant could be several months behind and not taking care of the home because they know they’re on the way out and not getting their security deposit back.
Tenant screening and background checks…
Proper screening is the best way to avoid having to evict a tenant in the first place. Finding well qualified tenants for your rental property is important for long term success. Much of the nation and especially Las Vegas have been hit hard by foreclosures and short sales. Many tenants will not have perfect credit which may be why they’re renting instead of buying a home. This is where experience can differentiate between a well qualified tenant who will pay the rent and take care of your home vs. the chronic abuser who is more likely to continue having credit and rent issues and not treat your home with care and respect.
Sometimes bad things happen to good people…
Even with proper tenant screening, sometimes life happens and the tenant, for whatever reason, may not be able to keep up with the rent. If the tenant is unable to get financial assistance from family, friends, community or government programs during a difficult time, the financial burden of the tenant’s unfortunate situation should not fall on the landlord.
Starting the eviction process…
5 DAY NOTICE TO PAY OR QUIT
We'd like the tenant to catch up and stay current on the rent, however there's no time to wait and see as timing is very important. This is where self-managing landlords often make a mistake, potentially costing them thousands of dollars. Filing the 5 day notice only STARTS the eviction process. It’s better to start the process early and not proceed if the rent is paid vs waiting to see if the tenant will pay and then having to start at step 1 after they are already several weeks or months behind on the rent.
It is also critical at this step to file the 5 day notice correctly. Missing a step or incorrect filing can mean that you have to start all over again costing time and money and possible additional damages to your property.
Partial payments: Another common mistake at this stage is accepting partial payments. If you accept a partial payment, you may have to start over with a new 5 day notice; therefore small payments should be refused. However, a good manager will calculate the lowest acceptable payment that would financially benefit the owner to accept and restart the eviction process.
Your day in court…
If the 5 day notice goes unanswered (you’ve filed everything correctly), your eviction may be granted without having to appear in court. If the tenant filed an answer with the court, a hearing will be scheduled and the landlord or landlord’s property manager and/or attorney will need to show up for the hearing. At this point, it’s helpful to have a well-documented file including rent payments, landlord tenant correspondence, maintenance requests and repair history, etc. Showing up can be half the battle, so plan on leaving early to deal with traffic, parking and security screening. OF course, you won’t have to worry about any of that when you hire me as your property manager.
The lock-out …
After the eviction is granted, the constable must be paid for the lock-out. After receiving payment, the constable will post the eviction order and usually call the landlord the day before or morning of to let the landlord know what time the lock-out will take place. The landlord or locksmith has to meet the constable at the property for the lock-out to change the locks. The landlord is required to store the tenant’s belongings for 30 days and file proper notice before disposing of the belongings. Hiring the right property manager to properly document the items and give proper notice before disposing of the items can save some big headaches if the tenant later tries to claim the landlord didn’t follow the law in handling their possessions after the eviction.
Preparing the home for market…
My philosophy: Well maintained and clean homes attract better tenants! Tenants who value clean, well maintained homes generally take better care of your property compared to tenants who are willing rent a home that is dirty, needs paint, carpet or other maintenance. They are also willing to pay higher rent for a property that is up to their standards. This is an important first step so that you maximize profits and minimize headaches over the long term with your investment property.
After a tenant moves out regardless of the circumstances, preparing the home for market is when owners typically take the biggest hit financially. It’s not just about finding the cheapest guy to do the work…or even doing it yourself. This is where many owners don’t even realize how much they’re losing in potential income. Take a look at the following example where we account for time off the market during repairs:
Carpet : $2000
Handyman items: $800
2 weeks off the market: $750
Total cost: $6100 (requires no time/energy from the owner)
DIY and/or cheap labor:
Carpet : $2000
Handyman/DIY items: $300
DIY Cleaning: $25
6 weeks of the market: $2250
Total cost: $5925 (requires lots of time/energy from the owner)
More reasons to use a contractor...
The following are common mistakes when owners try to save money by doing the work themselves and/or hiring cheap labor:
- Poorly repaired drywall patches
- Wrong sheen (flat paint on walls or trim, etc)
- Paint on outlets, windows, floors, etc.
- Did not paint ceiling
- Used a brush instead of sprayer
- Cleaned the house first and got dirty again during work
- Painted first, then caulked
- Painted before removing carpet
- Painted before repairing all drywall issues
- Painted before replacing trim or doors
- Didn’t remove blinds before painting
- Missed items during cleaning such as air registers, ceiling fans, front doors, above doors, window tracks, windows, blinds, etc.
- Skipped maintenance items like caulking tubs and sinks, replacing air filters, light bulbs, smoke detector batteries, etc.
Finally ready to market…
Don’t waste all the hard work and expense of getting the house ready for market with bad pictures and ineffective marketing. I provide professional real estate photography at no cost to the owner, MLS listings and rental home marketing with a long track record of proven results to attract the best qualified tenants for your rental property. I want to help get your rental home back on track to being the income producing and headache free investment it was intended to be.
Other Images courtesy of Stuart Miles at FreeDigitalPhotos.net
Gavel Image courtesy of bluebay at FreeDigitalPhotos.net
Lock Icon Image courtesy of lekkyjustdoit at FreeDigitalPhotos.net